BRUSSELS (Reuters) – Euro zone economic growth will be stronger than previously expected this year thanks to cheaper oil, a weaker euro, stable global growth and supportive fiscal and monetary policies, the European Commission said on Tuesday.
In its quarterly economic forecasts of main economic indicators for the whole 28-nation European Union and the 19 countries sharing the euro, the EU executive arm also forecast a pick-up in inflation later this year and declining unemployment.
The Commission expects euro zone economic growth to accelerate to 1.5 percent in 2015 from 1.3 percent forecast three months ago. It kept unchanged its previous forecast of 1.9 percent growth for next year.
“The European economy is enjoying its brightest spring in several years, with the upturn supported by both external factors and policy measures that are beginning to bear fruit,” said Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs.
As the economy accelerates, so does euro zone inflation — the Commission raised its forecast for consumer price growth this year to 0.1 percent from a price fall of 0.1 percent forecast three months ago. Next year consumer prices are likely to rise 1.5 percent rather than 1.3 percent expected earlier.
Stronger growth will also help bring down unemployment more quickly — the Commission now expects an unemployment rate in the euro zone of 11.0 percent this year and 10.5 percent next year, down from 11.2 percent and 10.6 percent respectively projected earlier.
The euro zone’s aggregated government deficit will also be smaller than previously expected at 2.0 percent rather than 2.2 percent this year and at 1.7 percent in 2016, rather than the previously forecast 1.9 percent.
Euro zone debt has peaked last year at 94.2 percent of GDP, the Commission said, and will now fall to 94.0 percent this year and 92.5 percent in 2016. Three months ago the EU executive arm expected debt would only peak this year at 94.4 percent.
(Reporting By Jan Strupczewski; editing by Philip Blenkinsop)